The German airline had postponed the decision following the September 11 terror attacks that sparked a crisis in the airline industry that has cost more than 100,000 jobs, a slump in profits and drop in passenger numbers.

Lufthansa (FLHA) said the first 555-seater double-decker A380 would be delivered in 2007. Lufthansa declined to discuss the price of the order but each aircraft has a list price of $240 million.

"With this decision, we are signalling a future-oriented investment, which will help strengthen Lufthansa's position long term in international competition," Chief Executive Juergen Weber said in a statement.

The German airline, which has grounded aircraft following the attacks, is expected to announce job cuts on Friday, a source told CNN. Germany's national carrier could axe up to 4,000 jobs, according to a Reuters report last month.

Airbus, the world's second-largest passenger jet maker, has been attempting to break Boeing's 30-year stranglehold on the jumbo market. It has won about 80 orders, excluding the latest Lufthansa order.

But the company needs to book between 250 and 300 A380 orders before the project breaks even, analysts said.

Boeing has turned its attention to developing a sub-sonic cruiser after winning no customers for its planned 747X, a stretched version of its popular 747 jumbo.

Lufthansa will use the A380 on routes to New York, Tokyo, Singapore and Delhi from Frankfurt. The airline has not made a decision on the power plants to power the aircraft, a spokesman said.

"The A380 allows per-seat costs to be reduced by between 15 and 20 percent," Weber said.